All Forum Posts by: Pal Sa

Why so sarcastic? I fully intend to make it liveable and comply with the code. If allowed, I would like to rent it out to interested people. What do you see so wrong in it? I am curious to know.  Is calling it a shed triggering the reaction? I see it as a tiny home. I dont know the right word for it.

 Thanks. Yes. I will do that. I fully intend to comply with the code. I wanted to find out from this group if anyone has done it before.

I am thinking of building a shed in the backyard for rental purposes. I live in the bay area. If you are knowledgeable about various aspects I need to consider, please do share. The high-level plan is to build a cozy shed with space to sleep and work and have a mini kitchen and toilet and shower. It has its own entrance. Ideally, I would like to rent it out on a short-term basis and if allowed on a long-term basis. If I can't rent it out, I will use it for my personal purposes. This is not an ADU. I dont have the budget for building an ADU.

Is it feasible and possible?

Can a shed have a toilet and shower?

Approximately how much does this project cost? How is the permit process for sheds?

Has anyone done this in the bay area successfully? I am in San Mateo County. 

I am confused about parking. I might have to let them parking in the driveway and I park one of ours near the curb. How did you all solve the parking problem? Do short-term renters have a car? They do most likely. I live in a suburb and public transportation is not close by.  There is plenty of street parking.  I wonder if neighbors are going to resist. 

Do I need to get a separate internet connection or upgrade the existing one and share wifi?

I lived in this house for a few year(>5 years). During my time there, I made home improvements like adding new floors, a bathroom addition, etc. Later converted this into a rental. Can I add the cost of these improvements to my purchase price and depreciate them along with the building value?  

Let us say I got the home for 500K. The land is 200k, the building is 300k. I spent another 50k in improvements over 5 years. Then I rented it out. Can I depreciate 350k over 27.5 years? 

 Thank you. Tax assessment bill of purchase year or the year for which I am filing income taxes for (2022)? Seems like there is some flexibility here to use whatever is most favorable.

I started renting out my once-primary home in 2022 and doing the taxes for 2022 now. I need some help to do my taxes. I am hoping to do taxes by myself.

So I purchased this home a few years ago for a certain price. To determine the cost of land for depreciation, should I look at the cost of land in the year purchased or the year for which I am filing taxes? I looked at the county records and the land value has changed from the purchased year to 2022. Should I be using the land value in the purchased year or 2022 as I am filing taxes for 2022? 

I believe I should use the purchase year because the land value has changed over the years and for doing taxes for 2023, the land value in 2023 may be different and that becomes a moving value, and doing the depreciation may be hard.

I will have more questions as am I doing this. Please bear with me.

Thanks. My eventual goal is to get to cash flow positive and then probably stay under the market value from that point on. A 5.5% increase will still be below market value. 

It is not under any rent control. Looks like 5.5% does not sound unreasonable. Thanks.

Bigger Pockets forum, 

Happy Thanksgiving to you all.  My rental home is coming up for lease renewal. Our tenants would have stayed there for a year by then. They have been good. They pay rent on time. I am able to work with them on maintenance requests and other issues. I would like to offer them a lease renewal opportunity. I am interested to have them continue as well. 

I am thinking of increasing the rent by 5.5%. I am in San Francisco Bay area. I looked at the comps now. Similar ones are asking for a minimum of 10% or more than the current rent I am charging. Charging 10% more will actually put me in a cash flow-positive situation but I am wondering if they think it is a steep increase. I can take one step increase at a time. 

What do you think about a 5.5% increase?

I would like to share a few observations and lessons I learned during renting out my home

1. A brand new appliance makes the home attractive to prospects. It is better to buy a new one than spend a ton of time cleaning and fixing it. The first few prospects commented about the stovetop. Since it came from more than one person, I wanted to address it and spent 2 weeks cleaning it - disassembling the front door of the oven, cleaning the glass surface and putting it back, cleaning the oven rack, cleaning the stovetop with bleaching powder, soap, blade. In the end, I bought a new stove. 

2. I still have not figured out an easy application process. Mine was hard. I knew it.  I am sure I lost a few prospects because they could not figure out how to submit applications. I did not use the Zillow application because I wanted to get the applicant's SSN and Driver's License # and  Zillow's application does not give those to the landlord.  

3. I said no to pets initially and later allowed small pets. Many qualified renters have pets and my neighborhood is pet friendly. The kind of people who want to rent there have pets.

4. Those who are interested will move very fast with the application. Two of them showed a lot of urgency. I did not respond immediately or I wondered why they are moving so fast. By the time I got back to them, they already signed somewhere else. 

5. There are many entitled applicants. They started giving orders - can we ask the color of paint to be white if you are going to paint and even asked me to include it in the contract. First, I never said I will paint. Second, it is not your choice. They made many such demands. I wonder whether they will ask their 100+apartment managers the same. Probably not. 

6. Dont mention any good changes(enhancements) you may want to make. In the beginning, I mentioned a few and then they did not leave those during the process and took control of the conversation. It did not look like a healthy start for a partnership. I stopped telling except that I will get the house cleaned before move-in. 

7. I did not have the lease agreement ready when I started showing the home. It took me a long time to get it ready and revise. I should have different versions of the lease - pets, no pets, early termination clause, month to month are all variations. 

8. I heard expat tenants are great. Both on this forum and in real life, people gave awesome reviews about them. I had a few inline and I waited as long as I could to go with them. It did not work out but I will still consider them next time.

9. Rent payments - It took a long time to learn about different options. I am going with what works for tenants - Zelle, checks, and wire transfer.  What works for one applicant may not work for the other and may not work for the landlord. I might need to use a mix of payment options even for one tenant.

10. It is a huge learning curve the first time. A friend said it is so easy to rent in this area and houses go for rent like hotcakes. It was not the case for me. I had to put in a lot of effort and time.  During the time I was waiting, some homes were getting listed and delisted in a week. It was very sad and frustrating for me.

11. I showed it to way more people than I should. I wish I have a way to figure out who the really interested ones are and showed it only to those. 

I will add more to this thread as I remember. Please correct me if I got any wrong. This forum has helped me a lot.